In addition to a decline in the overall value of the Swedish pharmaceutical market in the coming five years, we envisage the same trend in the number of clinical trials conducted in a country known for its research capabilities. As the costs of pharmaceutical studies continues to rise, Sweden will struggle to attract investment in this area, with negative ramifications for the industry as a whole as well as for the wider economy, especially given the downward pressure on pharmaceutical prices. Nevertheless, we expect to see further positive developments in the research and development (R&D) field, as the country offers clear advantages in this arena.
Headline Expenditure Projections
- Pharmaceuticals: SEK36.14bn (US$5.34bn) in 2012 to SEK35.27bn (US$5.58bn) in 2013; -2.4% in local currency terms and +4.6% in US dollar terms. Forecasts virtually unchanged in relation to the previous quarter's projections.
- Healthcare: SEK332.25bn (US$49.07bn) in 2012 to SEK341.19bn (US$54.02bn) in 2013; +2.7% in local currency terms and +10.1% in US dollar terms. Forecasts broadly unchanged in relation to the previous quarter's projections.
Risk/Reward Rating: Sweden remains viewed as a moderately attractive regional market. On the positive side, factors such as the country's high per capita incomes and strong regulatory foundations will continue to promote per capita spending on pharmaceuticals and healthcare in general. However, the downward pressure on pharmaceutical prices will continue to be acutely felt in this small market, of less than 10mn people.
Key Trends And Developments
- In September 2013, Swedish Medivir entered a licence and distribution agreement with Spanish Ferrer for the commercialisation of US Alexza Pharmaceuticals' Adasuve (Staccato loxapine) in the Nordic region. In Europe, Adasuve is approved for the treatment of mild-to-moderate agitation of patients with schizophrenia or bipolar disease. The treatment combines the proprietary Staccato inhaler system with loxapine, an antipsychotic drug. Ferrer is Alexza's commercial partner for Adasuve in Europe, Latin America, Russia and the Commonwealth of Independent States countries (CIS).
- A new inquiry by Swedish special investigator Sofia Wallstrom, published in September 2013, has proposed rules for setting the prices and supply of pharmaceuticals in Sweden. The inquiry covers three areas: a new pricing model for original pharmaceuticals without generic competition; the availability of pharmaceuticals in pharmacies; and the substitution of pharmaceuticals in pharmacies, which we see as a further threat to pharmaceutical prices. The proposal emphasises the need to develop the link between price and volume, and also recommends that international reference pricing should be implemented after five years, subject to further expansion after 10 years.
- In August 2013, prominent Swedish pharmaceutical company Meda AB signed an agreement to acquire US development company Acton Pharmaceuticals, including its proprietary product, Aerospan (flunisolide), an inhaler for the treatment of asthma, for US$135mn. The acquisition of Acton Pharmaceuticals aligns well with Meda AB's strategy of pursuing a stronger presence in the US market. Aerospan, with its novel spacer technology, gives Meda AB a clear profile in its highest priority area of respiratory therapies.
BMI Economic View: We forecast Swedish real GDP growth accelerating through the rest of 2013 and into 2014, as household consumption picks up, exports recover and the government loosens fiscal policy, with recent economic data surprising to the upside. The major risks are rising levels of leverage for Swedish households, as well as elevated real estate prices.
BMI Political View: The left-wing opposition is clearly on track to win the September 2014 election, defeating Prime Minister Fredrik Reinfeldt's ruling centre-right coalition. This has been our core view for a long time. Nevertheless, we see the elections as being a reasonably tight race.